Private limited companies are increasingly becoming popular in the UK. The good news is that you can choose to register a company online utilizing a company formation agent. These companies also provide customer service staff who can help you to register your company. When it comes to setting up a private limited company, you don’t need to provide a minimum amount of capital or have many employees working for your company.
After all, most of the private limited companies registered in the UK are quite small. In some cases, the company formation agent can ask you to provide modified accounts rather than full accounts to register your business. This article discusses the key things worth knowing about a private limited company.
Forming a private limited company
For many sole traders, it’s a good idea to register a private limited company. In this way, with these unstable and ever-changing economic climates, sole traders can protect themselves from trading losses. Remember that a sole trader can mean that your company is responsible for its debts and trading losses. As a result, the business creditors cannot touch your assets, the liability can be limited to a business owner’s share amount.
Simply put, running a company as a sole trader can mean that you are liable for the company’s borrowings to the creditors once the business fails. Even worse, you can be held liable for claims that the insurance company is not covering. This can be quite costly when your business fails.
But if you decide to create a private limited company, then your company can pay for the trading losses from other income. This means your income and personal assets can be protected regardless of what happens to your company.
Another good thing about a private limited company is that the business profits can be liable for corporate tax at a single rate. In most cases, this can be a better rate than the one you can pay as a sole trader. The tax rate for sole traders tends to be quite high, so it can affect your profit margins.
There are some benefits that small and medium-sized businesses or sole traders enjoy, but large businesses can also benefit. Incorporation is the best way you can protect your business against someone who wants to register it. A good way you can beat the competition is to get the various variants of your business name so that you can prevent someone else from doing business under a similar name to yours.
When you register your company, you don’t have to begin trading until you know that you are ready. The private limited company can be dormant for years, but you may still have to submit your company’s annual accounts. The good thing is that you just have to submit a simplified form of the returns to make it easier to handle and less to worry about.
Remember that you can’t sell your shares to the public for a private limited company. But if your company grows to a certain level and you want to sell your shares or you want to get huge funding via investment, then you can convert your company into a public limited company. With a public limited company, you can sell your shares to the public, and even have the shares traded on the stock exchange.
The benefits of having a private limited company
A private limited company is a legal entity, and it allows you to keep the company’s finances separate from personal finances. There is personal liability protection. This means that your personal assets cannot be at risk if your business fails. Keep in mind that a shareholder’s liability tends to be limited to the number of shares you hold that are unpaid.
Registering a company can enhance the credibility of your business. As a result, it can be easier to secure funds for your company and there is less personal risk.
A private limited company can also improve customer confidence. Your company can be perceived to be more reputable and professional. This can improve trust with your commercial partners and customers.
Also, a private limited company can still operate even if a shareholder or director passes away. It also has a lower rate of tax liability, meaning you can get a lot of tax benefits.
There are a couple of things that you need to be aware of to operate a private limited company. For example, you may need to have company accounts so that you can maintain proper bookkeeping and account records. You also need to submit your financial statements to the right authorities, and you can do this within nine months of the financial year-end.
You should also note that a private limited company needs to have a minimum of one company director. You can decide to have directors from other companies, but there should be a dedicated name for at least one director.
That said, a good way to register your private limited company is to use a company formation agent. Many of these agents usually ask for your company name to have your business registered as a private limited company. They don’t usually require any documents when forming a company online. But a limited company can also need a registered office address, a shareholder, and a director.
When it comes to the name of a limited company, there are some things you need to remember before you choose a name. For example, some company formation agents cannot accept registering your company if the same is considered to be offensive or they think it has a connection with a public authority or government body.
There is also a good chance that a company formation agent cannot register your company name if it is the same as other registered company names. Besides, you cannot use a company name that is believed to be misleading or has confusing symbols and signs. Above all, the company’s registered office needs to be in the country where it was incorporated, such as Wales, Scotland, or England.